Monday, March 28, 2011

SALF's Year of Zeros: Did the CDC executive who moonlighted as Save-A-Life's treasurer submit false information in a sworn report to the IL Attorney General?

As reported last October by The Hill, Douglas R. Browne was corporate treasurer of the Save-A-Life Foundation (SALF) from 2004-2009, when the Chicago-area nonprofit went belly up. That was a side gig for Browne. His full-time job has been working for 25+ years at the US Centers for Disease Control and Prevention (CDC) in Atlanta where he's now a Deputy Director.

Re: Browne's relationship with SALF, according to this November letter, the Inspector General of the Department of Health and Human Services has referred concerns about "potential misconduct" to the CDC for "further review and appropriate administrative action."



The "further review" may include questions about what happened to the $3.33 million awarded to SALF by the CDC. They may also be asking about Browne's signatures on SALF's AG990-IL reports. That's the financial report Illinois charities are required to submit each year to the Attorney General's Charitable Trust Bureau (CTB).

SALF has been under investigation by the CTB since last July. Unreported is that SALF's most recently-submitted AG990-IL triggered the investigation. CTB accountant Trudy Motyka rejected it as "incomplete."

Here's a series of demand letters sent over the months from Ms. Motyka to SALF founder/president Carol Spizzirri requesting missing financial records. (These letters are the most recent available documents associated with the investigation. Until that's completed, the barn door on FOIA requests has been shut as provided by IL state public records law.)



Calling the AG990-IL "incomplete" is something of an understatement. In fact, it's completely zeroed-out.

Whoever signed the report - presumably SALF founder/president Carol Spizzirri and Browne (whose names and signatures are on the sworn document) - claims SALF had no income or expenses from July 1, 2008 through June 30, 2009. Not a penny earned nor spent during 12 months, a period which shall herein be deemed SALF's Year of Zeros.



Here are but a few contradictory records.

An October 11, 2009 Chicago Tribune article reported, "(Carol) Spizzirri, 63, has quietly closed the foundation's headquarters in Schiller Park." Sounds like the description of a recent event, doesn't it?

Here's a snip from an independent auditor's report that accompanied SALF's previous AG990-IL for FY07/08, also a sworn document, also signed by Spizzirri and Browne, and also signed by SALF's accountant, Steven D. Garrels.


If you don't have your reading glasses, it says SALF signed a non-cancelable lease for their Schiller Park offices for the year ending June 30, 2009 (the last day of the Year of Zeros) agreeing to pay a total of $33,030 "paid in monthly installments of $2,753." Some might consider rent to be what professionals in the financial industry refer to as "an expense."

Before moving on, please note the last sentence: "Rent expense was $278,914 for the year ended June 30, 2008." That comes to...wait a second, let me get my calculator...divide by 12 and...WTF??? $23,242 per month one year, then $2,753 per month the next??? (Don't ask me, I'm lousy with numbers. Try CPA Steven D. Garrels.)

Since SALF apparently paid $33,030 rent during their Year of Zeros, the company may also have had phone service, utilities, and other common office expenses including salaries and employment taxes for employees and members of the board.

For instance, here's a screen shot from the minutes of a 2007 meeting of SALF's corporate board, in which Treasurer Browne and Corporate Secretary Rita Mullins motion and second $40,000 salaries for one another:  


In a May 9, 2007 article about a defamation lawsuit filed by her organization, Mullins told the Daily Herald reporter : "I know (SALF) to be a very well-run organization.”  

What about legal fees to pursue their lawsuit? According to news reports and this Harvard Law web site that tracks Internet free speech cases, the case was active through the Year of Zeros and beyond. Unless SALF's attorney was working pro bono, that sounds like an expense.

What about travel expenses, like this trip to the White House, extended to SALF as a valued member organization of FEMA, and attended by Corporate Secretary Mullins?


How 'bout income? Per this screen shot, SALF was soliciting donations for a September 19, 2009 fundraiser, waaaayyy past Day One of the Year of Zeros which was July 1, 2008. According to the YofZ AG990-IL with Spizzirri's and Browne's signatures, their organization didn't raise a cent from this event or from any other income sources - not even interest from money in their bank account(s).


That weird squirrel/rat character was SALF's mascot, "Perry Medic." Ha, ha, get it? Probably paid for with your tax dollars. Maybe not so funny. 

Also SALF must have incurred expenses designing and uploading this solicitation page for the 5K Perry Medic Rat Race and co-hosting the September 19, 2009 event with Anderson Hospital in Maryville, IL. SALF also had to pay for their website in Year Zero. At this writing, someone still owns their SALF.org domain. Avast me hearties, another expense!

What are the potential consequences for providing false information on an AG990-IL? According to a representative of the AG's office, this amounts to perjury which falls under Illinois criminal statute 720 ILCS 5/32-2, making it a class 3 felony, punishable by up to three years in prison and up to a $25,000 fine. Presumably those who signed documents with false information might be held accountable.

Here's a screen shot from the bottom of page 2 of SALF's Year of Zeros AG990-IL:

Tuesday, March 8, 2011

Clown time is over? Fraud whistleblower asks Ronald McDonald House Charities to investigate what happened to $125,000 awarded to Save-A-Life for phantom Chicago Schools program and why records were "prematurely destroyed"

Chicago Schools CEO Arne Duncan, unknown woman, SALF founder/president Carol J. Spizzirri, and Ronald McDonald, January 12, 2005. According to a recent San Diego Reader article, Duncan called Spizzirri - a twice-convicted shoplifter who fabricated medical and college credentials and whose late daughter took out a protective order against her - "one of my heroes."

In a January 5 letter to the Inspector General of the Chicago Public Schools (CPS), fraud whistleblower Peter Heimlich requested an investigation into what happened to $62,000 paid to the Save-A-Life Foundation (SALF) to provide first aid training to students.

The lion's share was $49,000 arranged and signed off by then Schools CEO Arne Duncan for a matching grants program with Ronald McDonald House Charities in which SALF was contracted to train 18,000 students over two school years. (For years, Duncan was close to SALF and even appeared as an animated pitchman on SALF's website.)

The problem - for CPS and for Duncan, now Secretary of Education - is that the training may never have happened.

Yesterday the problem landed on the desk of Martin J. "Marty" Coyne, president and CEO of Ronald McDonald House Charities via another investigations request letter from Heimlich. The opening paragraphs:
This letter is to request that your company initiate a review to determine if $125,000 awarded to the Save A Life Foundation Inc. by Ronald McDonald House Charities and by Ronald McDonald House Charities of Chicagoland & Northwest Indiana was properly administered.

Further, this is to request a review to determine if the destruction of related financial and other records, confirmed in an e-mail sent last year by Doug Porter, CEO of Ronald McDonald House Charities of Chicagoland & Northwest Indiana, was premature and constitutes a violation of Ronald McDonald House Charities’ Records Management Policy.

If such reviews are conducted by your company, this is to request that upon completion all relevant documents and findings be made available for public inspection.
Here's Heimlich's letter on Scribd. Click here to download a copy.
Heimlich asks McDonald's House to review $125K Save-A-Life grants, destroyed files (+receipt conf.)


Here's a highlight:
(In a) July 4, 2010 e-mail, Doug Porter, CEO of Ronald McDonald House Charities of Chicagoland and Northwest Indiana wrote:

I’m sorry to report that those records being 6+ years old have been destroyed. We do not have any files left on this grant and given that we had turned down any future requests, never in a million years did I think they would ever be relevant again. But again, the records that you had (we discussed) seemed to be accurate. That $37,500 from our local chapter (matched by global) in 2004 was the only one I recall.

This appears to be a clear violation of the records retention guidelines as stated in Ronald McDonald House Charities’ Records Management Policy
Grant Administration - Administration of donations made by RMHC to other organizations - including applications and agreements. While Active + 10 years thereafter
McDonalds Charities Chicagoland CEO confirms $37,500 payment to Save-A-Life Foundation; records destroyed



Ouch.

What about Mickey D customers debating whether or not they should drop the change from their Happy Meals into the donation can next to the cash register?
(Past) and potential future donors to Ronald McDonald House Charities may harbor concerns as to whether their donations have been or will be properly administered. Given the uncertainties associated with the administration of the $125,000 RMHC awarded to SALF and what appears to be the premature destruction of related financial records, donors may harbor concerns regarding whether RMHC employees properly administered those funds. Donors may also harbor concerns regarding RMHC employees' relationships with SALF.
So how to determine how many Chicago Schools students received SALF first aid training courtesy of the $125,000 from RMHC?

Heimlich's letter offers this helpful suggestion with names of some folks who may not be lovin' it:
Should your company wish to locate that information, you may wish to contact members of SALF's 2009 executive board; former SALF employees Sid Blustain and Dane Neal, both named in SALF's October 14, 2004 press release about the CPS training program; and Saquan Gholar who, according to CPS records, was SALF's “Education Training Coordinator” for the program. Please find attached a list with contact information for these individuals.